Right to Buy needs reform to avoid social housing stock losses

The LGA is proposing reforms to the Right to Buy scheme in order to prevent the current net loss of much-needed social housing stock year on year currently being experienced by local authorities.

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The Local Government Association is proposing reforms to the Right to Buy (RTB) scheme, first introduced in 1980, in a new position paper in order to prevent the current net loss of much-needed social housing stock year on year being experienced by local authorities under the current system.

At a time of acute housing shortages, where more than one million people are on council housing waiting lists and councils are spending £1.74 billion annually on temporary accommodation, the LGA is calling for major reforms to the Right to Buy scheme by giving councils: 

  • Control over how and when monies raised through the scheme should be used on the development, delivery or acquisition of new homes.
  • Power to protect a council’s financial investment in both existing and new social housing stock from a loss-making transaction. 
  • Flexibility for councils to shape the scheme locally so it works best for their local area, housing market and people. 

The latest figures show that, for the last financial year, 10,896 homes were sold through RTB and only 3,447 have been replaced, resulting in a net loss of 7,449 social homes in 2022/23.

The LGA said its new paper – on behalf of councils across England – set out how next month’s Budget needs to include key reforms to the RTB scheme to ensure it works for everyone. Whilst Right to Buy can and has delivered home ownership for many, the current form does not work for many of those in need of social housing who are unable to access secure and safe social housing or the local authorities seeking to support them.

The LGA said the main concern for councils is that rising discounts, alongside other measures that restrict councils use of Right to Buy receipts, mean that one household’s home ownership is increasingly being prioritised over another’s access to secure, safe, social housing. 

It comes as new LGA analysis reveals that £7.5 billion has been handed out in discounts since 2012.This will be further exacerbated following the government’s confirmation that the maximum discounts available to tenants from April 2024 will increase in line with the Consumer Prices Index (CPI) figure of 6.7 percent to £102,400 outside London and £136,400 in London.  

Despite attempts made by government to curtail the net loss of homes with the 2012 commitment to replace those sold on a one-to-one basis nationally, this has not been achieved, with nearly 120,000 homes sold and only 44,000 replaced in that period. Due to the restrictions around the use of Right to Buy receipts, which the Government allowed councils to keep 100% retention of in 2022/2023 and 2023/2024, the money raised from the sale of a property is usually not sufficient to cover the building costs of replacing the property, resulting in the decline in the number of properties local authorities are able to build. The LGA has previously estimated that a further 100,000 homes will be sold up to 2030, with only 43,000 replaced.

Now more than ever the Government must remove the rules and restrictions which disincentivise local authorities from building social homes, at risk of losing them. Councils must be given the control, power and flexibilities use receipt monies in a way that works best for their local areas. 

Cllr Darren Rodwell, Housing spokesperson for the LGA, said:

“We are facing a significant housing shortage in this country which has pushed council budgets to the brink as they struggle to find suitable homes for an ever-increasing number of people. 

“Whilst the Right to Buy can and has delivered home ownership for many, the current form does not work for local authorities and many of those most in need of housing support are simply unable to access secure, safe social housing. 

“It is time for the Government to overhaul a system which has seen our social housing stock significantly diminish. If the Government adopts our proposals this would allow councils to resume their role as a major builder of affordable homes, which support strong and healthy communities and help to build prosperous places.”

Notes to editors 

Our asks of Government: 

1.The control over how and when monies raised through the scheme should be used on the development, delivery or acquisition of new homes by; 

  • Retaining 100 per cent of receipts permanently 
  • Combining receipts with grants and other funding pots 
  • Removing the restriction on the percentage new homes funded by receipts 
  • Remove time limit on spending money raised from receipts  

2. The power to protect a council’s financial investment in both existing and new social housing stock from a loss-making transaction by; 

  • Increasing the tenancy requirements from three to 15 years 
  • Granting the cost floor indefinite protection for properties purchased through Right to Buy, and allowing the cost floor to be increased by inflation – specifically an index based on construction cost inflation 
  • Considering a complete exemption for new build properties, and those which have been retrofit or improved 

3. The flexibility for councils to shape the scheme locally so it works best for their local area, housing market and people by; 

  • Allowing local authorities to set the discount levels at which homes can be purchased 
  • Removing the cap on the number of homes which can be acquired using receipts 

View our full position statement here.